The present invention relates generally to coupons and coupon redemption and, more particularly, to a universal coupon redemption system and method for issuing and redeeming both paper and electronic coupons.
Coupons long have been a valuable marketing tool for manufacturers and retailers seeking to increase sales. Although coupons first were introduced decades ago, the process for issuing and redeeming coupons has remained relatively unchanged over time and, in many respects, has become antiquated and subject to fraud.
Traditional paper coupons generally are issued by manufacturers and distributed to consumers through many well known channels, such as newspapers, magazines, direct mailings, and the like. Consumers then collect the published coupons and present them to a participating retailer for redemption at the retailer's cash register when making a purchase.
Redemption of such coupons in the prior art ranges from coupon validation by visual inspection by the retailer's cashier to sophisticated POS systems that compare the POS system-decoded coupon barcode data to the transaction log of the purchase transaction to validate the coupon. However, no known prior art coupon redemption systems, with the exception of the systems and methods disclosed in United States patent applications which are commonly owned with the present application, and to which the present application claims priority, which are incorporated herein by reference, provide an audit trail to identify and audit the coupon redemption transaction. Thus, the possibility for fraud exists.
Regardless of the method by which a coupon is redeemed by a retailer, all paper coupons collected by the retailer in traditional prior art coupon redemption systems are manually sorted and returned to the manufacturers for reimbursement. Typically, this is done by a professional clearinghouse. Retailers bundle together redeemed paper coupons and ship them to the clearinghouse. The clearinghouse then sorts the coupons by manufacturer and retailer and forwards the coupons to the appropriate manufacturers along with an invoice for payment.
The manufacturer generally reviews the coupons for evidence of fraud (for example, large numbers of similarly and evenly cut coupons, similar cuts and tears, consecutive numbering, counterfeits and/or any other irregularities as published by the Joint Industry Coupon Committee (“JICC”)1, and then issues reimbursement checks to the retailers, through the clearinghouse, based on the number of coupons that the manufacturer deems valid. 1 Such irregularities, as provided by the JICC, can include: (a) Store Sold or Closed; (b) No Store at this Address; (c) Coupon Appearance; (d) Counterfeit; (e) Consecutively Numbered; (f) Gang-cut; (g) Similar Cuts & Tears; (h) Washed; (i) Wrinkled; (j) Expired Coupons; (k) Abnormal Coupon Mix; (l) Proof of Purchase Required; (m) Excessive Coupon Volume; (n) Does Not Stock Product; (m) Out of Coupon Distribution Area; (o) Non-Coupons; (p) Billed to Incorrect Address Or Mfg.; (q) Invoice Calculation Error; (r) Claimed Coupon $ Exceeds Mfg stated; (s) Overage; (t) Shortage; (u) Illegible Tags; (v) Excessive Postage/Insurance; (w) Ineligible in-Ads; (x) Mfg. Has Not Paid Invoice; (y) Retailer Payment Suspended; (z) Held for Review; (aa) In-Ad Offer Discrepancy; (bb) Non-Compliance of In-Ad Promotion Terms; (cc) Competitive Retailer's In-Ad Coupon; (dd) Non-Compliance of In-Ad Promotion Period; (ee) In-Ad Contract Not On File; (ff) Addition Store Tag(s) Received; (gg) Claimed Store Tag(s) Not Received; (hh) No Payment Adjustment Made; (ii) Agent Recommended No Pay; Mfr Paid; (jj) No Bar Code; and, (kk) Bar Code Won't Scan.
Often times the manufacturers require that the retailers provide proof of purchase of the products which, in most cases, cannot be proven by the retailer without an extensive search of the retailer's records; and, in some cases, proof of purchase cannot be proved at all when a retailer utilizes a manual system of posting of customer receipts and issues the credit to the customer without recording the lengthy coupon identification number.
If some coupons are deemed invalid by the manufacturer, for lack of proof of purchase or otherwise, the retailer will not be reimbursed for such coupons. This is known as a “chargeback.” However, in an effort to combat such chargebacks, some retailers will deduct the amount of the chargeback from the retailer's future payments to the manufacturer for products delivered to the retailer. This time-consuming process creates additional costs for manufacturers, retailers, and, ultimately, consumers.
Additionally, under most known coupon redemption systems, it may take anywhere from three to twelve weeks to complete the coupon redemption process through the point of reimbursement to the retailer, during which time the retailer must float the amount of the redeemed coupons, thus creating additional financial burden that is ultimately paid by the consumer. Thus, prior art coupon redemption systems are inefficient and uneconomical.
Moreover, not only is the traditional prior art paper coupon redemption process costly and time-consuming, it also is replete with opportunities to defraud manufacturers and retailers on many levels. Such fraudulent activities often are being written off as a cost of doing business and are passed on to the consumer, creating further unnecessary cost.
Coupon fraud is a long recognized problem in the coupon industry, and it is a problem that is receiving increased attention. Simple cases of fraud arise when consumers intentionally submit to retailers expired coupons or coupons for products, sizes, quantities and/or combinations thereof that were not actually purchased by the consumer during the purchase transaction.
However, even more significant problems stem from two major opportunities to commit fraud in the traditional prior art coupon redemption process. The first opportunity lies in the ability of a consumer to create and redeem a counterfeit coupon. In this context, a counterfeit coupon is a copy of an invalid coupon that has the appearance of a valid coupon. For example, with the widespread availability and use of relatively inexpensive and high-quality personal computer equipment, coupons easily may be forged, making an invalid coupon appear valid on its face. By some accounts, redemption of counterfeit coupons costs the United States coupon industry hundreds of millions of dollars every year.
The second opportunity for fraud in the coupon redemption process lies in the practice of shipping coupons to the manufacturer or the manufacturer's representative (the clearinghouse) for reimbursement, without controls for authenticating the number of, and value of, the coupons shipped. For example, a recent coupon fraud case filed against coupon clearinghouse alleged a complex fraudulent coupon redemption scheme netting over $250 million.
With the hope that encoding more data on coupons will help reduce fraud, recent advancements in barcode technology have resulted in a shift in the coupon industry to more complex barcodes that can store more data. To that end, traditional barcodes (such as UPC coupon and UCC/EAN-128 extended barcodes) are in the process of being supplanted by reduced space symbology (“RSS”) barcodes (known as the GS1 DataBar) which allow significant amounts of data to be encoded in a reduced physical space. Thus, the GS1 DataBar barcodes are capable of encoding complex coupon redemption requirements on coupons.
However, the more complex the barcode symbology and the greater the amount of data encoded in such barcode, the more advanced the decoding software must be and the more robust the POS system must be in order to properly validate the more complex barcode data. Moreover, the more data included in the barcode, the more physical space the barcode must occupy on the coupon.
Thus, the coupon industry's efforts to reduce fraud are resulting in the need for more complex systems with increasing large and complex barcodes taking up valuable real estate on coupons. The POS system upgrades required to meet the coupon industry's efforts to reduce fraud are expensive and, in many cases, cannot be met by smaller retailers due to the financial burden. Thus, the very efforts the coupon industry is taking to combat fraud and reduce overall costs are, ironically, creating greater cost for the retailers.
What is needed, therefore, is a simpler, cost-effective universal coupon redemption system and method that provides a solution for coupon fraud. Desirably, such a coupon redemption system and method can redeem both paper and electronic coupons. More desirably, such a coupon redemption system is controlled by an independent third party to directly handle coupon validation, verification and redemption. Even more desirably, such a coupon redemption system and method can be readily integrated into retailers' existing POS systems, including self-checkout systems, for a relatively modest cost. Most desirably, such a coupon redemption system and method provides a verifiable coupon redemption audit trail. The present invention satisfies these needs.